The process against Visa has not been officially disclosed by the authorities, but it would observe its practices in the debit market
Visa has the largest financial network in the US, which has also allowed it to become one of the largest global agents
Limiting the networks for transactions, in theory, would allow the company to obtain a higher lev
el of income
This, despite the fact that businesses and companies that are using these networks could use alternative, more affordable systems.
Now Visa has a little more in common with the big Big Tech of the United States (USA). According to Reuters , the brand is at the center of a new investigation by the Department of Justice (DoJ). This, due to alleged anti-competitive practices within the debit card market. The information was first released by the Wall Street Journal , which cites internal sources close to this process. The institution has not made an official announcement.
According to these people, they want to investigate whether Visa is actively limiting how businesses handle debit transactions. The financial institution would have prevented its allies from using less expensive networks for their benefit. The DoJ is already talking to some of these merchants, focusing their questions on how they do their operations online. At the same time, they are also considering whether these practices are carried out at physical points of sale.
It should be noted that network usage fees are technically invisible to users, but very expensive for businesses. The ultimate goal of the investigation is to determine whether the company is maintaining market dominance through illegal methods. The DoJ's decision comes after a series of internal processes, all of them focused on paying more attention to digital purchases. Merca2.0 requested and is awaiting a statement from Visa.
A boost to competition issues
The Visa process is not unique. In these months, government processes have begun against several companies for their alleged anti-competitive practices. In the case of the financial industry, however, it is a relatively new phenomenon. Most of the lawsuits have been directed against Big Tech. But agents like Winston said since last October that the DoJ was going to start paying more attention to banks and similar brands.
According to PwC , these processes are motivated by a change in the perception of government authorities about what competition means. Specifically, new thinking and legal frameworks will begin to be developed, better suited to the dynamics of an interconnected world. This is clear in the case of Visa, as the DoJ's research is focused on how it interacts with businesses that use its online operating networks.
While these legal processes should create a better condition for consumers and their relationship with larger companies, they could also have negative side effects. In the specific case of the financial sector, agents such as Roll Call point out that competition cases could affect the competitiveness of fintech agents . The same ones that could stand up to Visa and its established rivals when fairer conditions are designed.
New problems for Visa
The DoJ investigation is painting a more or less difficult 2021 for the financial institution. Something that makes their situation darker, considering that 2020 was not a very positive period for Visa either. At the beginning of the year, Ant Financial's growth in China was already challenging its global dominance. While it is true that the company ultimately collapsed because of Jack Ma , it is not the only challenge that the brand dealt with in those months.
Also, lawsuits have already been filed for alleged anti-competitive practices in the past. In November, it was announced that the US authorities would block the purchase of the fintech Plaid. Cending this platform to Visa, according to a San Francisco court, would have meant letting the brand eliminate a " nascent competitive threat ." At the time, the financial institution promised that it would defend the acquisition of this startup at any cost .
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